Amazon earned $111 million, or 26 cents a share, compared with $51 million, or 12 cents a share, in the year-earlier period.

Sales rose 32% to $3.02 billion from $2.28 billion.

Wall Street was expecting earnings of 15 cents a share on sales of $2.92 billion, according to analysts polled by Thomson Financial.

In a note to clients on Wednesday, Cowen & Co. analyst Jim Friedland upgraded Amazon shares to neutral from underperform. "We think the fundamentals have stabilized" at Amazon, Friedland said, citing positives including strong consumer demand and a "broadening of inventory and product categories."

Shares of Amazon rose 12% to $50.05 in late trading Tuesday. The stock has jumped about 20% since the company last reported quarterly results.

Amazon benefited mainly from a 5% surge in traffic to its retailing sites, which during its first quarter grew at a rate second only to eBay Inc.
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in the electronics-commerce sector, according to an analysis from Bear Stearns.

More traffic translated into more purchases, according to Nielsen/NetRatings, which on Tuesday said the number of items purchased on Amazon jumped 12% from a year earlier, to 23.1 million from 20.6 million.

The results also got a boost from stronger sales of electronics, which jumped 48% to around $947 million. Electronics were 31% of worldwide sales, compared with 28% a year earlier.

Sales outside the United States jumped 35% to $1.4 billion in the quarter, while domestic sales grew 30% to $1.62 billion.

Amazon.com Chief Executive Jeff Bezos said in a statement that the results were also boosted by growing traction for Amazon Prime, the company's first subscription-based feature, which offers lower shipping rates and easier checkout.

A jump in interest income also benefited Amazon's bottom line.

One of the most-watched Amazon metrics is its profit margins, a measure of how much it profits from the sale of each item.

Citigroup analyst Mark Mahaney early Wednesday upgraded Amazon shares to hold from sell. Amazon's operating-profit margin for the quarter was 5.9%, which is "materially higher" than what Wall Street expected and resulted from a more positive contribution from international sales, Mahaney said in a note to clients.

"This marked the first quarter of year-on-year margin expansion since the second quarter of 2004," Mahaney said.

Mahaney also cited as a positive Amazon's third-party sales, which are those that other sellers make through its site. "Third-party sales as a percentage of total unit sales reached a record high 30%," Mahaney said.

In a conference call following the earnings release, Bezos said capital spending is sure to increase in 2007 -- as Amazon invests in new features such as its Unbox video store -- but at a rate far smaller than a year earlier.

"As we move forward," Amazon is "certainly still working very hard for further cost improvements," Bezos said on the call.

The company also tightened its estimates for its second quarter, now projecting revenue of $2.7 billion to $2.85 billion. The company previously had estimated revenue at $2.8 billion to $3 billion.

Analysts had been expecting revenue of $2.69 billion for the quarter.

The forecast reflects growing sales from its aggressive pricing and promotions and was tempered by a postal-rate increase taking effect in May.

For the year, Amazon said it expects sales of $13.4 billion to $14 billion, representing a growth rate of 25% to 31%. The range exceeds the $13.37 billion analysts predict.

Amazon also increased its operating-profit projection for the year, to between $463 million and $593 million. The projection includes about $170 million in what Amazon describes as amortization of intangible assets.

The company said previously that operating profit would come in at $355 million to $505 million. The figures indicated a range of a 9% decline to 30% growth.

Amazon also said Tuesday that its board had approved a $500 million stock buyback over the next two years.

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